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Defining the Concepts of AIS

What Is The Concepts Of Accounting Information Systems?

The present research aims to investigate the impact of Accounting Information System (AIS) on the performance of the organization. AIS refers to the tool that when integrated into  the area of information and technology system facilitates the management  as well as control of topics in relation to economic – financial field of the enterprise (Hall 2012). But the increasing advancement of technology has generally opened up possibility of utilizing AIS in the enterprise. For bettering understanding the term AIS, the words should be illustrated separately. Firstly., accounting can be recognized into three main components that includes- financial data source, language of the businesses. Secondly, information refers to valuable processing of data that gives the basis for decision making. Thirdly, System refers to an integrated firm where  the structure focuses on the set of business objectives. The utilization of AIS effectiveness is huge spread of the information needed by several users of organization.AIS has been vital to the enterprise operations, either profit or non- profit oriented  enterprise requires to maintain this.  It has the impact on the business decision making and also assists administrative coordination in the enterprise. In addition, an AIS relates to those components that are basically put together for gathering raw data, information and then transform this into financial data for the objective to report them to the decision makers (Simkin, Norman and Rose 2014). This study basically analyses on the relationship between the AIS and the performance of organization. Furthermore, this study will also explore about the evidence that the enterprise culture facilitates to improve performance by interrelating with data quality, system quality and information quality.

The general purpose of this project is to assess the effect of AIS on the performance of an entity. Moreover, the other objectives also involves-

  • Examine the effect of AIS on the efficiency of management in the specified business
  • Assess the effect of AIS on the effective control of business in small and medium enterprises( SMEs)
  • Investigate whether integration of AIS improves the efficiency of the workers and enhances productivity
  • Explore whether adoption of AIS helps to gather more information for the businesses that operates in the global market.

The research of this project ahs further scope of providing more information or data to the enterprises that strategizes to integrate this tool in their business. As effective as well as efficient management of each enterprise is generally anchored on the quality decisions, this project will help the management of the enterprise to understand the significance of this tool within their operations. In addition to this, this study will however explore about the fact that leveraging of AIS within the business helps to compete in the present complex as well as flexible business environment and thereby provides the enterprises huge scope to expand the business globally. Furthermore, it also helps the enterprises to understand the requirement of information for different purposes and also concentrate on various accounting tools for supporting their business operations. The findings of this project will provide the businesses with some facts about the need of AIS within the business operation.

The Relationship between AIS and Organization Performance

In the present times, AIS apt to be the information system that generally do not stop at limiting the financial information as well as data, but also involves the data and quantitative as well as descriptive information that is useful in making business decision for the users. These users mainly include- present and potential leaders, creditors, investors, suppliers, customers and the governments. The accounting literatures basically argue that the strategic success is mainly taken into account the result of the AIS design. It has been analyzed from the recent study that the AIS has huge impact on the strategic management, thereby examining different attributes of AIS under various strategic priorities. It has been  opined by Sajady, Dastgir and Nejad (2012) that , the appropriate AIS design usually supports the business strategies in several ways by which it enhances the performance of the enterprise. Moreover, enhancing the investment of AIS also helps to achieve stronger as well as flexible enterprise culture for facing with the persistent changes in competitive business environment. This tool is also used in the business for recording all kinds of financial transaction occurring within the enterprise. It also combines methodologies, accounting techniques and controls with different technologies of IT sector for tracking transactions, financial statements, providing internal data reporting, external data reporting and analyzing the current market trend in which the business operates. According to Collier (2015), innovation in the AIS design also leads to better performance of the enterprise and decrease  financial as well as enterprise obstacles, thereby increases possibility to access the capital market. The AIS in business is crucial as it helps in administering the enterprise as well as integrating internal control system. But a vital question that arises in the accounting field is that whether AIS fits with the enterprise requirement for information control as well as communication (Hamdan 2015). Benefits of the AIS can be assessed by its influence on the enhancement of decision-making procedure, accounting information quality, internal controls, evaluation of performance and helping in transaction of organization.

Organizational performance mainly depends on the effective management of the business operations.  It is mainly explained as the effectiveness as well as efficiency of the quantifying approach which raises the productivity of the organization.  Every employees and staffs play a crucial role in the productivity of the organization and hence they contributes to the effectiveness of the enterprise. Effectiveness of the enterprise has been succinctly stated by Gelinas, Dull and Wheeler (2011) as the level to which the enterprise realizes its target and produces intended output. In the enterprise management perspective, the measurement of business performance reflects the procedure of quantifying the efficiency as well as effectiveness of the particular business actions that are viewed as to contribute in the accomplishment of the desired target.  It has also been found out by Hall (2012) that, enterprise performance also reflects on the ability of the firm to produce desired outcome. The performance of the firms also reflects the goals that they achieve in face of limited resources, disagreement among different interest groups and huge competition. Lucia (2013) states that there are several ways of measuring the performance of the company, which involves various criteria as  profit margin, productivity, business growth , turnover rate, cohesion and stability. The perspectives of open system concentrate on exchanges with business environment that involves- flexibility, adaptability, profitability etc. In context to this, the perspectives of natural system mainly concentrate on the target of the enterprise including morale, interpersonal skills, workers satisfaction etc. Rational perspectives mainly focus on attainment of previously set target as well as on the output variables such as productivity, efficiency and quality. According to Lucia (2013), utilization of AIS helps in improving the performance of the organization.

Objectives of the Study

One of the main advantages of the optimal utilization of AIS in the organization involves- high  level of competitiveness, better adaptation to the changing business environment and effective management of the all kinds of business transactions. It is also considered as the boost to dynamic enterprise nature with larger information flow between various staff levels. In addition to this, integration of AIS also increases the possibility of the new network in the business and enhances external as well as internal relationships within the enterprise especially with the international customers through its web. It has been found out by Lucia (2013) that, the AIS mainly operates certain function of collection of information or data, categorizing, processing and reporting the financial events with the target of providing accurate data for the objective of score- keeping and business decision making. It has been evident from some recent studies that AIS generally plays crucial role in effective strategic management and thus acting as the mechanism of enabling enterprise strategy. Radulescu et al.(2016) describes AIS relating to apparent usefulness of different information attributes such as timeliness, aggregation level, integration and scope of the business. Timeliness relates to the reporting accuracy, frequency and information orientation. Aggregation level signifies the method of aggregation in different time periods or according to decision models. Scope relates to the extension of AIS in space as well as time. Integration relates to the requirement of providing data to highlight the interaction as well as coordination impact of various functions in an enterprise. All these four attributes helps to highlight on the effectiveness of AIS on the enterprise financial performance. Recent studies also reflects on the fact that the enterprises systematically differs AIS design for supporting their strategy, identifying that AIS have potentiality to facilitate strategic management and improve the performance of the enterprise. Moreover, successful adoption of AIS also helps to save both time as well as money of the stakeholders. The value of information produced by AIS to stakeholders as well as shareholders helps them to make investment decisions. AIS also provides the financial managers of the organization with financial as well as accounting data, which in turn helps them to evaluate the past performance of the organization and map plans for the future.

AIS have also been taken into account as the vital enterprise mechanism, which are critical for the effectiveness of control and decision management in the enterprise. Gelinas, Dull and Wheeler (2011) opines that AIS being one of the vital systems in enterprise has changed its method of collecting, storing processing and distributing information. In today’s world, digital as well as on- line information is generally used in the AIS. The quality of data or information produced from AIS is also crucial for the management of organization. However, the organizations often utilize AIS for providing support to the management decisions. In fact, the management of the organization uses AIS for comparing information about present performance to few benchmarks for measuring the degree to which the target are being attained and also to identify unusual conditions. Hilton and Platt (2013) found out that, the internal controls typically revolve around the AIS for transferring financial information within the business. Thus, it also facilitates the managers to measure as well as monitor the effectiveness of accounting operations on the business performance.

Benefits of AIS to the Enterprise

Performance management plays huge role in enhancing the value of the organization. AIS are the most vital formal information sources in the industrial enterprises. In these enterprises, the AIS are designed in such a way that it provides all management levels with accurate as well as timely information to influence on the performance management as well as aid them make decisions in accordance with the enterprise goals. Thus, the performance management helps to measure the growth of business with the implementation of AIS.  AIS output mainly depend on the data quality and thus it is important to AIS.  It has been suggested by Hall (2012) that, all processes of data production (collection of data, storage of data, and utilization of data) should work properly for achieving high quality of data. According to Morrison (2015), inaccurate as well as incomplete data causes damage to competitiveness of organizations. It has been found out by some researcher that input control as well competent workers are important to data quality of AIS.


AAIS (Automated Accounting Information System) mainly provides tool for the finance department in enhancing effectiveness of the enterprise especially in the era of advancement of global technology.  It has been viewed by Rahayu (2012) that, AIS provides the enterprise with higher degree of flexibility and thus permits the managers as well as business owners to change the system of  collecting and distributing the financial documents. In addition to this, it also allows the managers in developing or reducing the processes, which in turn helps to reduce the time for processing the financial information. This in turn benefits the organizations to meet the target within the specified time.

The SMEs in the competitive business environment might not have the ability to strive for long period without effective management of expenditure, flow of cash and giving information for monitoring as well as control. However, integration of AIS aid the SMEs proper cost analysis, effective budgeting and business decision making. Belfo and Trigo (2013) suggests that the businesses are basically run with the shareholders’ capital, long term as well as short term borrowing that should be effectively accounted for.  Hence, with the integration of AIS mechanism, organizing a loan re-payment schedule will adversely impact the growth as well as expansion of SMEs in long-run. Hall (2012) poses that implementation of AIS system helps to translate all these various dimensions into financial dimension. Galliers  and Leidner (2014) further elaborates that AIS provides the mechanism for appropriate recording of all transactions especially the financial transaction, information production and storage relating to the financial flows as well as positions at certain time period. This tool which when integrated into the field of IT (Information and Technology systems) facilitates in the management as well as control of topics relating to company’s economic financial area.

Measuring Organizational Performance

According to Chae, Koh and Prybutok (2014), AIS is the part of enterprise information system that aid in giving processed information. This processed information however aids the management to take decision and that has huge impact on the profitability level of enterprise. AIS also help to improve utilization of the financial information in context of decision making procedure. Not only this, it also aids to analyze data as well as produce various alternatives. Therefore, with these, the processed data management can make accurate decision, which in turn leads to increase in profit of enterprise. Thus, adoption of this business system has enhanced profitability level as well as control of cost in the organization. Although AIS benefits the business in several ways, it has few disadvantages. These includes –

Loss of data- As AIS is basically computerized, there might be risk of loss of data or information through system crashes. In this situation, the company faces huge loss in the business.

Reevaluation-Enterprises often change its method of doing business for keeping up with the latest trends. Hence, the company faces huge problem in reevaluating the AIS for keeping up with these changes.

Conclusion

From the above report, it can be concluded that AIS influences the business enterprise both positively and negatively. AIS is an effective tool that helps in decision making of the organization in several aspects involving- managerial decision making, enhancement in performance measurement, aiding financial transaction procedure and profitability growth. But this system involves some risk such as loss of data, which in turn adversely impacts on the performance of the business. However, effective AIS design in accordance with business goals is necessary for the growth and expansion of business.

References

Belfo, F. and Trigo, A., 2013. Accounting information systems: Tradition and future directions. Procedia Technology, 9, pp.536-546.

Chae, H.C., Koh, C.E. and Prybutok, V.R., 2014. Information technology capability and firm performance: Contradictory findings and their possible causes. Mis Quarterly, 38(1), pp.305-326.

Collier, P.M., 2015. Accounting for managers: Interpreting accounting information for decision making. John Wiley & Sons.

Galliers, R.D. and Leidner, D.E. eds., 2014. Strategic information management: challenges and strategies in managing information systems. Routledge.

Gelinas, U.J., Dull, R.B. and Wheeler, P., 2011. Accounting information systems. Cengage learning.

Hall, J.A., 2012. Accounting information systems. Cengage Learning.

Hamdan, M.W., 2012. The impact of Accounting Information Systems (AIS) development life cycle on its effectiveness and critical success factors. European Scientific Journal, ESJ, 8(6).

Hilton, R.W. and Platt, D.E., 2013. Managerial accounting: creating value in a dynamic business environment. McGraw-Hill Education.

Lucia, P.P., 2013. ACCOUNTING, AN ESSENTIAL COMPONENT OF THE INFORMATION SYSTEM. Annals of'Constantin Brancusi'University of Targu-Jiu. Economy Series, (1).

Morrison, R., 2015. Data-driven organization design: Sustaining the competitive edge through organizational analytics. Kogan Page Publishers.

Radulescu, D., St-Hilaire, M.O., Allard, Y. and Hammond, T.R., 2016. Sharing AIS Related Anomalies (SARA). OODA Technologies Inc Montreal, QC Canada.

Rahayu, S.K., 2012. The factors that support the implementation of accounting information system: a survey In Bandung and Jakarta’s taxpayer offices. Journal of global management, 4(1), pp.25-52.

Sajady, H., Dastgir, M. and Nejad, H.H., 2012. Evaluation of the effectiveness of accounting information systems. International Journal of Information Science and Management (IJISM), 6(2), pp.49-59.

Simkin, M.G., Norman, C.S. and Rose, J.M., 2014. Core concepts of accounting information systems. John Wiley & Sons.

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